When your minor child starts earning - who pays the tax?

If the income is earned by the child through her own manual work or by using her special talent and expertise, the clubbing provisions will not apply, and such income shall be taxed in her own hands.

Balwant Jain

October 13, 2025 / 08:24 IST

How is tax paid on the income of a minor child

A parent whose child earns from singing performances may wonder whether the income is taxable or will be clubbed with the parents’ income. Here’s how the tax rules apply to minors earning through their talent and investments.Moneycontrol's Ask Wallet Wise initiative offers expert advice on matters of personal finance and money. You can email your queries to askwalletwise@nw18.com, and we will try and get a top financial expert to address your queries.My daughter, aged 15 years, is a singer. She has now started giving stage performances and has begun earning a decent amount. Does she have to pay any income tax on this income, or will it be included in my income? In addition to the above income, she has interest income of Rs 15,000 from bank fixed deposits.

Expert Advice: As per the clubbing provisions under Section 64(1A) of the Income Tax Act, any passive income arising or accruing to a minor is required to be clubbed and included in the hands of the parent whose income is higher.

However, if the income is earned by the child through her own manual work or by using her special talent and expertise, the clubbing provisions will not apply, and such income shall be taxed in her own hands. She will have to file her Income Tax Return (ITR) if her total income exceeds the basic exemption limit, even if she does not have to pay any tax due to the rebate available under Section 87A.

Under the old tax regime, the basic exemption limit is Rs 2.5 lakh. If she opts for the new tax regime, a higher exemption limit of Rs 4 lakh is available.

The interest on fixed deposits, being passive income, shall be clubbed with the income of the parent whose income is higher. Please note that once the income of the child is included in the hands of a particular parent, it shall continue to be included in that parent’s income even if the other parent’s income becomes higher in subsequent years.

Therefore, the interest income of Rs 15,000 from fixed deposits shall be included in the hands of the parent whose income is higher. An exemption of up to Rs 1,500 per child is available under the law, so the income of your daughter to be included in the parent’s hands shall be Rs 13,500.